Brett,
I use Mach2, though I tried Mach3 and had the same problem.
Miscrostepping does reduce torque, because when you switch to microstepping, then in order to maintain the same speed the driver has to send more frequent pulse rate to the motor. And if you look at a torque diagram of a step motor you can see that the torque decreases with the increase in ppm value. Anyway, that's what I know.
I've just hooked up it all to my PC (the first trials were made with a laptop) and there was the same problem. It's almost two weeks now that I'm trying to solve this issue, before mounting the motors on the mill, and there is no progress.
Any suggestions?
Daniel